As an advertiser and a publisher I have ad CTR data spanning hundreds of millions of impressions and about a million ad clicks across a wide array of verticals. One of my early opinions on contextual ads and search ads was that people are far more likely to click ads if they are desperate, stupid, or ignorant. While I was flamed for my opinion, this opinion has only been confirmed from talking to friends who have much more data than I do, and Dave Morgan from AOL also confirmed it.

Based on what I've seen qualitatively, my hypothesis would be that heavy ad clickers are:

More representative of lower income households than the average user.

Less educated than the average user (or from less-educated environments in the case of minors).

More likely to live outside of the major metro regions.

More likely to be using [social networks] to meet new people than the average user (who is more likely to be using SNSs to maintain connections).

The problem with catering to the lowest common denominator is that the people who are clicking the ads

have less of an ability to buy premium products

are less likely to do follow on marketing for you to promote your products to other

are a small minority of your visitors

are driven away from your site when they click

each day many ignorant users learn more about the web and click less ads

the new users coming on the web replacing those who are learning about it are even poorer and less socially connected than those already on the network

In the next couple years there is going to be a major shift in online ad based business models where many publishers push themselves up the value chain. The trend for profitable publishing, is going to include the following aspects

fewer ads

ads with more information

ads that look more like information

ads tighter integrated into the content

having a semi-porous brand which allows your free content to do your marketing for your paid content

in many case selling ads that include personal endorsement, and ads for white label products or house products (often via subscription)

As more premium publishers shift from ad based models to selling white labeled and house products it is going to get harder to buy ads affordably on the clean parts of the web. And the trend has already started. If you look at some of the most popular investment sites you will see that many of them provide free offers for products that lead you into buying a subscription service.

Contextual advertising makes it easy for people who are not good at selling but good at building an audience to profit from their traffic stream. But the traffic stream that contextual ads work best for are search referrals, especially since

the contextual ad networks are extensions of the search ad networks

regular visitors learn to ignore ads

the contextual ads typically have little to no editorial pre-sell

Sorry, You're Done. Thanks for Playing Webmaster

Google keeps changing and refining its own approach and policies to improve the quality of its results and in this effort, it appears that it may have become more restrictive and intolerant of issues and deviations from the official standards that it didn't bother about before.

The Difference Between Large & Small Publishers

If you monetize via Google's ads, much (perhaps most) of your revenue comes from Google searchers landing on your site, and thus you are stuck with Google's editorial search guidelines, which sometimes shift arbitrarily. In spite of Robin being a premium AdSense partner he was punished without warning. Google does it to their business partners large and small, though typically with more vengeance if the partner is small.

the fact of the matter IS that GOOGLE CAN and DOES arbitrarily penalize sites without being transparent about the reasons it does so.

Is it right that Google has so much power over my ability to "exist" as an entity over the internet? Isn't this the case, as Fabio Masetti says, of Google being able to play with the same net neutrality issues we fear from large telcos, for by having the mere possibility to switch off any content without official justifications, while asking me to plead guilty before I am even re-considered?

When & Why I Stopped Trusting Google

If you have read this blog for the last month you could probably tell Google recently killed one of my sites as well. While it may have seemed my posts were due to anger, they were more to show how my perspective changed as I discovered and experienced how sleazy Google's business practices are firsthand. I still speak truth, but as my experiences changed so did my understand of truth. I still like Gmail and some of Google's other services, but I am finding it incredibly hard to trust them as a company.

Imagine re-branding a site you built over 10,000 organic links to, only to have Google view it as a deceptive redirect and KILL ALL OF YOUR LINK EQUITY while paying spammers to steal your content.

A single Google engineer can decide to kill the viability of a site because of who owns it. Then they pay people to steal your work. It is a long, drawn out, perhaps endless process to protect work from theft, especially if Google decides they would rather pay a thief to steal your content than to pay you directly. How could they do that without expecting you to speak publicly about how unjust that is?

If I wasn't an SEO they might not have taken vengeance on me so heavily, but because I know SEO, and I shared too much honest information they decided the only appropriate thing to do was to punish me by nuking my site. I respect that perspective, but it doesn't mean that I have any respect left for them.

Google: the Ultimate Parasitic Business Model

The more you trust Google the harder you fall when the day comes that they have a technical error, or one of their engineers is having a bad day and decides they no longer need you.

For a few years maybe the yields are a bit bigger, but then the seed prices go up, and so does the cost of the fertilizer required to make the seeds grow. Your margins keep going down until you are financially insolvent, while the engineering team gets a raise every year.

Why You Don't Need Google

To maximize Google AdSense earnings you have to place the ads front and center, which scare visitors away from your site, and make people less likely to read your site, trust your site, revisit your site, link to your site, or subscribe to your site.

If you don't plaster Google ads all over your site then your site is likely going to be viewed as being far more credible, and easier to link at, subscribe to, trust, etc. As your industry grows you grow faster than competing sites that use AdSense do.

To appreciate the difference between mediated growth with Google and natural organic logarithmic growth you can compare the sites Google just killed versus the growth in earnings of SeoBook.com. A couple years ago Google created a poor relevancy algorithm that filtered out thousands of websites for their official business names. Even when they filtered out SeoBook.com the site still earned 85% of what it made the month prior, and that is with a business model that sold information on how to rank on a site while that site was not even ranking for its own name!

The point being here is that if you use Google you set yourself at a specific spot on the value chain. If you try to maximize those earnings you prevent yourself from growing as quickly as you could/should. If you move yourself up the value chain Google not only controls less of your traffic, but they also only touch the least valuable portions of it. Unless you use Feedburner Google does not control your brand evangelists.

Should you trust your business to Google? Do you trust them more than you trust yourself? If so, submit a job application.

People Tolerate (and Expect) Ads:

As Google's ad network gets more efficient and Google controls more bits, almost everything in any commercial market is going to sell something, subsidize another commercial interest, or have ads on it. To appreciate how much this trend will grow, just read the comments on my post about using custom search engines. Many of the comments are insightful, but almost nobody appreciated that not having ads in your internal site search result was a value add for a commercial site. If you look at blog search results for shower gel you will see Google's version of the web. Google and Microsoft already own in game advertisement firms. With Google bidding billions of dollars for part of the US wireless spectrum you can bet that there are going to be even more ads between content producers and consumers.

It doesn't matter what ads appear on the publisher site if they didn't sell the ads directly themselves. Somehow the publisher is off the hook because they didn't know, and it wasn't Google's fault because the system is partially automated.

Newspapers Practicing Automated Garbitrage

The above trend is going to make the most competitive keywords even harder to rank for as there will always be at least one fresh news story about every high value topic.

This just in...make money with the best forex platform!

This just in...mortgage rates are at all time lows!

This just in...online education is more affordable than you thought!

Google has already proved that they don't mind large publishers creating robotic content and building its authority with spammy links. Did you know that BizJournals offers Google searchers a credit card application service? If I posted similar content on this site Google would kill it.

Anyone Can do Public Relations

Beyond the recycled content, the movement will also be fueled by lazy underpaid writers who will heavily rely on social media and others work for story ideas. If you are good at spamming social media then the mainstream media will act as your megaphone without requiring you to hire a PR firm.

When is a Link Buy Legitimate?

Most profitable publishing enterprises are moving toward producing lower quality content. As a publisher, a brand is nothing more than something that allows you to practice arbitrage while appearing that you provide a valuable service. It allows you to get extra exposure and charge a higher rate for your ads.

If you are an individual or a small company, serving some markets directly with a product may not be as scalable as selling ads. The best type of ads to sell are overpriced CPM brand ads, but if you are in a high value niche you can also do well with affiliate offers and AdSense ads.

Most informational websites are monetized via selling ads. The most profitable ad any site can sell is an ad for itself, because there is already user trust and perception of control built directly into a person buying from the same trusted brand. If you don't believe that theory, track affiliate conversion rates while having a lead form on your site vs a lead form on a third party site. The on-site lead form will typically outperform a third party lead form sometimes by a factor of 2 or more. A friend of mine published a blue site about ringtones. He sent traffic to a green ringtone offer landing page that offered 15 bonus ringtones. He later tested sending the traffic to a blue ringtone offer landing page that offered 10 bonus ringtones. While offering less, the conversion rate was significantly higher because the conversion process felt more congruent from beginning to end.

If you must send visitors to another site for conversion try to pattern your site design and sales copy to match the end destination site design and copy. The more consistent the experience is the more money you make.

A few more tips to help boost conversions:

Make the review look unbiased, even if it is highly biased. Use bulleted list and show stats. Make the sales information look more informational than salesy.

Limit user choice. Make it sound like you already did all the review process and your recommendation is the obvious choice for the user's needs.

If your site is mostly an AdSense site, and you are getting a strong CPM, you might be able to make more by showing fewer ad units. Use the advanced AdSense reports to see if people are site targeting your website. If advertisers are site targeting consider pulling back one ad unit to see how that affects the CPC and CPM of the remaining ad units. Advertisers competing for less ad inventory should drive up the prices. If the gain nearly offsets the loss you are still ahead because you can replace that other ad unit with an affiliate ad, an ad for a branded advertiser, or an ad marketing your best content.

If many of your advertisers are thin affiliate sites, consider moving yourself up the value chain by cloning their offers and business models and improving upon them. You should be able to make more money selling directly because you keep the visitor, the supply chain is thinner, you can refine your offers over time, you can sell at higher price points, you can resell the customer, and your conversion rates should be higher because you are selling your own site and business.

The most profitable ad any site can sell is an ad for itself, because there is already user trust and perception of control built directly into a person buying from the same trusted brand.

Traditional Publishers Are Wising Up to the Web

John Wiley & Sons, the publisher based in Hoboken, N.J., is offering an array of free travel tidbits and articles on the site of its Frommer's travel-book series. Not only can visitors to the site read blogs or listen to podcasts, they can plan and book trips -- generating commission revenue for frommers.com.

When you think of the authority of the Frommer's domain name (over 10 years old, PR7, 364,000 links), they must be able to get millions of pages of content indexed.

The first publishers to put their whole books online will see amazing returns because few people are doing it. The WSJ article stated that Wiley was already enjoying 10 to 15 million a year from 3 flagship sittes (Frommer's, For Dummies, and Cliff Notes). After hearing the early results, others will follow, putting all or nearly all of their content online. The lagging publishers will make crumbs, but their books will flood the search results with content that undermines the value of lower quality content.

Books Publishing is Fast Becoming a Vanity Industry

I was offered to get SEO Book published by one of the leading book publishing houses. I have made more in a day than what they were offering me as down payment for writing the book. And they wanted me to do all the book marketing as well, for no further compensation unless I sold enough books to make the hot books lists. It didn't help that my profit margins from a book sale would have been less than what I pay for a click.

I was unwilling to get published because I thought there was upside in the current model, in a growing market, and realized that the model of being published did not work unless I was interested in feeding my ego, in need of credibility, or was writing a book just to up sell more expensive services.

Ad Revenues Are Richer Than Book Profits

I recently went on a book buying binge to get content ideas for one of my sites. I spent over $500 buying 30+ books, searching through them for their ideas, their structure, and their format. It was easy to do that because they are so under-priced relative to their value. I have an AdSense site that was far easier to create than many of those books were, but it makes about $1,000 a day.

If those publishers just put the content online they would make far more than I am from my AdSense site. My AdSense model only works so long as they don't put their content online, or I create a better known brand than they do.

Defending an AdSense Site's Viability

If your strategy is entirely long tail keyword oriented and you don't have a real brand your income will fall sharply in the next couple years. Site targeted AdWords will cause premium publishers to get paid more for similar content, and position placement reports will trim back the ad buys on sites with limited exposure and few conversions.

Not only will many of these books go online, but many of them with serious distribution and authority will act as gateways or clearinghouses for related books. What is to stop a publisher from pushing 10 other economics books on the Freakonomics site? Why not turn Frommer's into an endless sea of travel information?

Whoever introduces an idea gets credit for it, but, as hinted by my book buying binge tip, most of the content on the web is just copied and repackaged. Packaging and formatting can make an idea or kill it before it has a chance to spread. Everywhere I look there are free tips on formatting and monetizing, numerous competitors testing and tweaking, and market feedback is near real-time if I change my format or offer.

The only way to avoid losing to big publishers is to create real brands, position them as self reinforcing authorities, aggressively monetized and reinvest in marketing, and get hundreds or thousands of subscribers to spread your message and do your marketing for you.

When you buy site targeted AdSense ads (or other CPM priced ads), there are easy ways publishers can inflate their pageviews and ad inventory. I listed a number of them here, but a few other common techniques are

showing ads to bots (or running traffic bots against their site)

refreshing pageviews

framing external pages

adding a forum to a website

creating traffic exchanges and siphoning off credits

creating ad units that offer no value, but cash in on naive advertisers

Here is an ad unit on a popular category leading hub site. Notice that it is literally below the page footer in the forum section of the site. It is a great site with lots of traffic, but it is hard to profit from that ad unit.

If you blindly buy site targeted ads those are the impressions you buy first...the ones that are deemed to have the least value and/or the ones that are hardest to match to a commercial intent.

If you buy site targeted ads, in many cases you will be buying some amount of junk, so if you are buying as a direct marketer it is best to try to buy the most precise and most relevant ad possible. That could involve any of the following

contacting the webmaster directly for an ad on a specific section or page (prices can vary widely - I have seen ads of similar value in the same vertical priced from $6 to $1,000)

creating a relevant ad and ad group targeted specifically to a site

targeting a specific folder or specific page

Google's site targeted tool tends to aim for bulk buyers who do not care if they get a bit of remnant garbage inventory. They do not make it easy to add a specific page to a site targeted ad group unless you click the edit sites and CPMs link from a site targeted group, at which point in time you can list individual URLs or folders you want to target. Remember that if you list a home page or root folder page it will also place your ad on other pages from that site or folder.

SEL reports that Ask will soon roll out a contextual ad network, starting with their own premium branded sites:

The Ask contextual product will initially launch within IAC's own network of sites including Match.com, Ticketmaster, Evite and Citysearch and will then expand to trusted third party publishers. Individual publishers will most likely have to wait until next quarter to gain access to this contextual product.

If you bid on anything remotely related to the various large social networks with a dime a click max CPC you are going to get a lot of exposure. Here are some of my logs from my affiliate software. Out of a 20 minute period I likely got at least 9 clicks from MySpace.

Save Your Ad Budget:

If being one of the default backfill advertisers costs you only $12 a day that is going to cost you about $4,000 a year in worthless advertising costs.

If you are an advertiser and bid on keywords that trigger ads on these sites, and that leads to many impressions and ad clicks without any conversions it is best to filter those sites at the campaign level using site exclusion. Use facebook.com and mspace.com to ensure you filter out all subdomains.

Publishers: Earn More:

If you are a publisher, and people filter out these low value networks by name (ie: facebook, myspace, etc.) rather than URL, then you are filtering out a lot of advertisers if you mention those sites sitewide. You need to make sure you do not place sitewide links to profile pages on these sites using their official names in the anchor text if you do not want -myspace to filter out your ads.

Other terms that kill your ad targeting are worth avoiding. If a word has a glut of low value advertisers and is associated with low value content may also make sense to filter it out, like blog.

Think of words associated with large untargeted traffic streams as being the new poison words, especially if you use contextual advertising.